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Verdicts in the OeBS kickback affair

by Ursula Kampmann

November 13, 2014 – On October 3, 2014, at first instance, the verdict was given in the trial dealing with former executive managers of the OeBS (Austrian Banknote and Security Printing Agency) and of the Austrian Mint. After 20 hearing days the judge found seven of the defendants guilty and acquitted two others. The judgment isn’t final yet.

Earlier Johannes Miller, ex-executive director of OeBS, had given a full confession stating ‘I understood right from the beginning that in this market you cannot conclude contracts without paying the managing directors.’ He chose to do so because it was the only chance to run the company profitably.

To conclude agreements with Azerbaijan and Syria the defendants overcharged the bank by 20 per cent in the case of Azerbaijan and 14 per cent with Syria. This kickback returned to local decision makers. This was confirmed by a former sales representative whose role has remained unclear. Her lawyer pictured her as a small cog in the wheel emphasising that she did nothing else than what her superiors asked her to do. Other lawyers, on the other hand, described her as the initiator and an active player who even had had hold over her bosses. Until now she has not disclosed whom the 14 million euros were paid to. Therefore one of the lawyers conjectured: ‘She had the complete control, maybe she even pocketed the money herself.’

The court decided differently: ‘If T. had pocketed the money herself she would have betrayed the states of Azerbaijan and Syria picking up a quarrel with these regimes. We discarded this option from the first’, said judge Georg Olschak.

However, the judge exercised leniency with those who confessed and, as far as the managers were concerned, did not choose the strongest penalties. After all, the defendants had faced up to 10 years of imprisonment. The judge explained his decision referring to the altruistic motives which had moved the OeBS directors – they wanted to save jobs. Johannes Miller, Michael Wolf, and the sales representative were given two years on probation being guilty of embezzlement, bribery and money-laundering. Additionally Miller and Wolf have to pay 800,000 euros each, failure to payment will result in 8 months of imprisonment. Kurt Meyer and an ex-manager of OeBS were convicted to serve a 30-month imprisonment of which 20 months are on probation, and were fined 80,000 euros. Both appealed against the judgment immediately.

The hardest verdict was given to the two lawyers who had transferred the kick-backs taking for themselves 4 per cent of the bribery money. That made it clear according to the judge, that they acted purely through greed of profit unlike the executive directors. One of these lawyers was fined 80,000 euros and was condemned to a 3-year imprisonment (of which two on probation), the other received 30 months (of which 20 on probation).

Wolfgang Duchatczek, former chairman and former vice-executive director of the OeBS, was acquitted. The judge underlined that there had never been any clear evidence against him or incriminating witness reports. It was not sufficient for a verdict, according to the judge, that he simply should have known of these actions.

The judicial proceedings against OeBS and Austrian Mint had been suspended previously, as well as the lawsuits against Ewald Nowotny, governor of the Austrian National Bank, and Peter Zöller, director of the Austrian National Bank.